Dollars & Sense: What you need to know about audits

Thursday

Jan 31, 2013 at 1:00 PM

Few words in the English language set off alarm bells like the word “audit.” The good news is there are ways to reduce the likelihood the Internal Revenue Service will tag you for an audit. Nevertheless, if a letter from the IRS does appear in your mailbox, don’t panic.

Statistically, the IRS only audits about one percent of taxpayers with incomes under $200,000, according to the tax experts at the Oklahoma Society of Certified Public Accountants. There are red flags that can raise the likelihood you’ll be audited, however.

Here is another helpful tip to protect yourself against an audit:

Do submit consistent information. If you get a W-2, you probably won’t have to worry about income statements that don’t match. But if you get 1099s, get paid in cash or have additional income from other sources, make sure that the amount you declare matches what the IRS has received from other sources.

Other inconsistencies can also attract attention. For example, if your last name isn’t consistent throughout your paperwork or if you transpose a couple of numbers in a Social Security number, you may get flagged.